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08

March USDA Supply & Demand

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The USDA surprised traders with a 225 million bushel cut to U.S. corn ending stocks. The reduction came from a 175 million bushel increase in exports and a 50 million bushel increase in ethanol production. The average trade guess was expecting ending stocks to fall just 40 million bushels.

Soybean ending stocks increased 25 million bushels due to a 10 million bushel increase in crush and a 35 million bushel decrease in exports. Trade expectations were calling for no change in stocks.

Wheat ending stocks increased 25 million bushels on an equal cut to exports. Pre-report estimates were expecting a smaller 6 million ton increase to ending stocks.

 

2017-18 USDA U.S. Grain Carryout (bln bu)
 
USDA
Mar
2017-18
Average Trade Est.
Range of
Trade Est.
USDA
Feb
2017-18
Corn
2.127
2.312
2.240-2.352
2.352
Soybeans
0.555
0.530
0.490-0.580
0.530
Wheat
1.034
1.015
0.995-1.099
1.009

 

World ending stocks were reduced for both corn & soybeans, largely due to reductions in South America. Argentine corn production came in at 36.0 million tons vs. trade expectations for 36.58 and down 3 million tons from 39.00 last month. Argentine bean production was estimated at 47.0 million tons vs. a trade guess of 48.36 and down 7 million tons from last month.

Brazil corn production was reduced just 0.5 million tons to 94.5, above trade guesses expecting a larger cut to 92.22 million tons. Brazilian bean production was increased 1 million tons to 113.0 vs. trade expectations for 113.83.

 

2017-18 USDA World Grain Carryout (million tons)
 
USDA
Mar
2017-18
Average Trade Est.
Range of
Trade Est.
USDA
Feb
2017-18
Corn
199.17
199.36
192.30-203.10
203.09
Soybeans
94.40
95.31
93.00-98.10
98.14
Wheat
268.89
265.63
263.00-267.50
266.10

 

2017-18 South American Production (million tons)
 
USDA
Mar
2017-18
Average Trade Est.
Range of
Trade Est.
USDA
Feb
2017-18
ARG Corn
36.0
36.58
34.00-38.50
39.00
ARG Soy
47.0
48.36
43.00-53.00
54.00
BRZ Corn
94.5
92.22
86.20-96.00
95.00
BRZ Soy
113.0
113.82
112.00-116.00
112.00

 

December corn settled at the high of the day at 4.10 ¼ as traders reacted to a much smaller than expected U.S. corn carryout and confirmation from the USDA of smaller Argentine production. Soybeans initially traded lower with the increase in U.S. ending stocks but May futures rallied to close down just a penny and half and new crop closed positive (but just barely). Wheat futures closed mixed, with Chicago up 2 cents, KC wheat down 1, and Minneapolis up 4 ¾.

With the report behind us, traders will likely turn their attention back to the weather in Argentina and the dryness in the Plains.

Long-range GFS forecasts in Argentina remained wet in the afternoon update, leaving traders to debate: If it does rain, how much could yields improve or has the damage already been done?

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These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. This commentary is written as a daily marketing tool to help farmers sell the grain they raise. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Past performance and testimonials are not necessarily indicative of future results. Commodity trading involves the risk of loss, and you should fully understand those risks before trading.